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2023 (3) TMI 279 - AT - Income TaxAssessment u/s 153A - Unsecured loan u/s 68 - incriminating material found during the search or not? - HELD THAT - As in the absence of any incriminating material found during the search action and duly following the judgements in the cases of CIT (Central-III) vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT hold that the assessment u/s 153A/143(3) of the Act in the instant case for AY 2010-11 was not justified and therefore is quashed. We further find that identical issue arose in the case of the husband of the assessee, Mr. Vinod Kumar Taneja 2022 (9) TMI 1424 - ITAT DELHI wherein the Co-ordinate Bench of Tribunal had dismissed the appeal of the Revenue. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue nor has Revenue pointed to any distinguishing feature in the present case and that of husband of assessee, Mr. Vinod Kumar Taneja - Decided against revenue.
Issues:
1. Validity of assessment under section 153A/143(3) of the Income Tax Act. 2. Treatment of unsecured loan and undisclosed investment in shares. 3. Abatement of proceedings under section 148 due to section 153A notice issuance. 4. Interpretation of incriminating material requirement for additions in assessment. Issue 1: Validity of assessment under section 153A/143(3) of the Income Tax Act: The case involved an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) related to the Assessment Year 2010-11. The Assessing Officer (AO) had framed an assessment under section 153A r.w.s 143(3) of the Act, determining the total income of the assessee at Rs.4,67,61,580. However, the Commissioner of Income Tax (Appeals) quashed the assessment, citing that the re-assessment proceedings could not have been abated, based on the second proviso to section 153A of the Act. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) as the additions made in the assessment were not based on any incriminating material found during the search action. The Tribunal concluded that the assessment made by the AO under section 153A/143(3) of the Act was not justified. Issue 2: Treatment of unsecured loan and undisclosed investment in shares: The Revenue raised grounds regarding the addition of Rs.11,40,750 on account of an unsecured loan under section 68 of the IT Act and Rs.4,52,34,540 on account of undisclosed investment in shares. The Commissioner of Income Tax (Appeals) held that since no incriminating material was found during the search, the additions made by the AO were not justified. Consequently, the Tribunal dismissed the appeal of the Revenue, stating that the additions on account of unsecured loan and undisclosed investment did not survive. Issue 3: Abatement of proceedings under section 148 due to section 153A notice issuance: The AO reopened the case under section 148 of the Act based on information received, but due to the issuance of a notice under section 153A, the proceedings under section 148 were abated as per the second proviso to section 153A. The Commissioner of Income Tax (Appeals) disagreed with this approach, following the decision of the Delhi High Court in the case of Kabul Chawla, and quashed the assessment under section 153A/143(3) of the Act. The Tribunal upheld this decision, emphasizing that the abatement of proceedings should be determined based on the date of the initiation of search, not the date of the notice under section 153A. Issue 4: Interpretation of incriminating material requirement for additions in assessment: The AO made additions in the assessment order under section 153A/143(3) of the Act without any incriminating material found during the search action. The Commissioner of Income Tax (Appeals) and the Tribunal held that the additions made by the AO were not justified, as they were not based on any incriminating material. Citing relevant judgments, including the case of CIT vs. Kabul Chawla, the Tribunal emphasized that assessments under section 153A should be made only on the basis of seized material, which was lacking in this case. The Tribunal quashed the assessment, stating that the AO's assumption of jurisdiction under section 153A was not justified. In conclusion, the Tribunal dismissed the appeal of the Revenue, upholding the decision of the Commissioner of Income Tax (Appeals) to quash the assessment under section 153A/143(3) of the Income Tax Act for the Assessment Year 2010-11. The Tribunal found that the additions made by the AO, including those related to unsecured loans and undisclosed investments, were not supported by incriminating material and therefore were not justified. The Tribunal's decision was based on the interpretation of relevant legal provisions and precedents, ensuring a fair and lawful assessment process.
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